The European/Canadian disease

Robert Goldberg:

Someone once asked Nobel laureate physicist Riccardo Giacconi, who conceived the Hubble telescope, why so many great European scientists moved to America. "A scientist is like a painter," Mr. Giacconi said. "Michelangelo became a great artist, because he had been given a wall to paint. My wall was given to me by the United States."
Today, we stand at the dawn of an age of personalized medicine, when screening for genetic variations will allow us to provide the right drug, to the right person, at the right time, for the right outcome, as a matter of course. Yet even as we are on the verge of this triumph, what Mr. Giacconi called our great wall of innovation is being painstakingly disassembled, brick by brick, and shipped to Asia and India, where policy-makers are more appreciative of the alchemy of entrepreneurship that sustains scientific progress.
Last week, Congress held hearings on the Pharmaceutical Market Access and Drug Safety Act of 2005. This bill forces companies to sell, make and import their products from Canada and elsewhere, where government sets prices and access to medicines. (Incredibly, it would also let versions of drugs that haven't gone through the Food and Drug Administration testing process into the United States. But that's for another article.)
Forcing companies to basically ship their medicines overseas so they can be discounted and re-sold into America would destroy the global market for new medicines, as it has already done in Europe. Thanks to Europe's version of drug importation, it's biotech companies have no cash, their drug companies launch fewer new products than 10 years ago compared to America and biomedical research dollars have flowed to the United States.
Now, some of the European companies that moved here to escape price controls are already preparing to move again, to Asia, if Congress passes the act.
Five years ago, for instance, Sir Thomas McKillop moved research operations of his pharmaceutical firm, Astra Zeneca, to America to escape the European regime of price controls and rationing. Recently his company developed two cancer drugs at considerable cost and risk. On April 15, however, Sir Tom announced that, with passage of the Pharmaceutical Market Access Act, he would likely relocate Astra Zeneca to China or India.
Clearly Canada is free riding on drugs, paying nothing for the research and development cost. This is the classic problem with monopolies where once the basic cost of a product is covered it can be discounted to subsequent purchasers. The answer is not to require the company to sell products here at the lower cost, it is to make the Canadians pay their fair share of the R & D cost. One of the difficulties with that approach is that the Candian health care system is already barely functions by rationing care. It is in need of a fundamental overhaul that would do away with socialized medicine. Medicine is not the only Canadain free ride on the US. Their defense contribution is appallingly weak. When they do contribute troops to an operation, they do not have the means to transport them. They are not willing to pay a share of the cost of missile defense. They have become the great white tick of the North.


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